An India-EU Trade Pact May Still Remain Elusive

The Hindu     8th February 2021     Save    
QEP Pocket Notes

Context: India- European Union (EU) trade pact may remain elusive as COVID-19, Brexit, and international tensions have unsettled the EU and exacerbated its internal discords.

Factors necessitating India-EU Partnership:

  • Democratic similarities: EU and India are well suited for a special relationship as they are the largest democracies and unions of linguistically, culturally and ethnically diverse States.

Factors that make India-EU trade pact elusive

  • Issues with Comprehensive Free Trade Agreement 2007: Movement of professionals, labour, human rights and environmental issues, India’s high tariffs, inconsistent tax regime and non-payment of arbitral awards.
  • Turbulence in the EU: Before COVID­19 and Brexit, the EU had the same GDP as the United States, however, it is now facing the following problems:
    • Structural lack of unity: E.g.
      • It took months to agree on a long-term budget and a COVID-19 recovery package due to objections from Hungary and Poland.
      • Germany, the Netherlands, Portugal and others are uncomfortable with the prospect of building larger military capabilities while countries like France support such a move.
    • Breach of the rule of law: for making a strategy to deal with China, Russia, Turkey and Iran. 
    • Impact of COVID-19 pandemic: e.g.
      • Riots in the Netherlands for the first time in 40 years
      • Resignation of the Italian Prime Minister. 
      • Divisive Vaccine Nationalism: Germany had negotiated a separate vaccine contract.
  • Shadow of Euroscepticism: Germany (Alternative for Germany) and the Netherlands (Geert Wilders) have strong Eurosceptic movements like that of Britain (Brexit).
  • EU’s drive for greater self-reliance: In security, economics, supply chains and climate change.
  • Neutral approach towards China: Underlined by the EU-China Comprehensive Agreement.

Conclusion: Trade agreements with India is the least of the EU’s problems as it has to address innumerable and diverse problems between the member countries without further widening existing ruptures.

QEP Pocket Notes